United States President Joe Biden has recommended increasing developmental assistance to India in areas such as clean energy, digital economy and countering rising authoritarianism.
The proposed increase in India’s developmental aid from $25 million in fiscal year 2021 to $66 million in 2023 is included in the State Department’s draft budget, which was delivered to the US Congress by the White House on March 28.
The State Department’s portion of the budget stated that by strengthening renewable energy and other climate programming, the funding increase for India promotes the country’s role as a regional leader. It also noted that the investments in digital economy will also benefit from the funds.
“The assistance will combat increasing authoritarianism, bolster human rights and strengthen civil society participation and democratic governance,” added the State Department.
Overall, the government has proposed $302.2 million in development aid for South Asia in order to promote sustainable development and combat destructive economic practices and unsustainable debt.
The funding is also expected to help combat climate change by expanding investments in clean energy and climate risk adaptation.
One of the success stories touted by the State Department is a programme run by the Treasury’s Office of Technical Assistance (OTA) in India. According to the department, India’s Ministry of Housing and Urban Affairs made substantial success in its Smart Cities programme, which encourages cities to issue local project loans.
Local debt issuance, which is still in its early stages in India, encourages greater ownership and better planning of infrastructure and development projects from water treatment to enhanced local transportation, the department noted.
The Smart Cities Mission is a joint effort of the Ministry of Housing and Urban Affairs (MoHUA), and all state and union territory (UT) governments. It aims “to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to smart outcomes”.
The mission is launched to ensure that these cities are “liveable, inclusive, sustainable, (and) have thriving economies that offer multiple opportunities to people to pursue their diverse interests”.
However, OTA previously assisted Pune municipality, in its first bond sale in 2017. As a result of their success, OTA and the Ministry of Housing and Urban Affairs expanded their collaboration to include six other cities – Vadodara, Pimpri-Chinchwad, Rajkot, Mysuru, Faridabad and Mangaluru.
It is also collaborating with the cities and the Ministry to help incorporate best practices and lessons learned from the US municipal finance system, improve project vetting and monitoring, investor disclosure and lower the regional capital improvement plan’s cost of capital.
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